Raise prices?

photo by Joe Pugliese for The New Yorker

photo by Joe Pugliese for The New Yorker, click through for source.  

Tim Ferriss: If you could have one billboard, anywhere with anything on it, what would you put on it? If you wanted to convey a short message to as many people as possible.

Marc Andreessen: I’ve got one, I’ve actually thought about hiring a skywriter to do this one. Right in the heart of San Francisco would be a billboard with just two words on it: Raise Prices.

TF: Raise prices?

MA: Yes. The number one thing – just the theme and we see it everywhere – the number one theme with our companies have when they get really struggling is they are not charging enough for their product. It has become absolutely conventional wisdom in Silicon Valley that the way to succeed is to price your product as low as possible under the theory that if it’s low-priced everybody can buy it and that’s how you get the volume. And we just see over and over and over again people failing with that because they get in the problem we call too hungry to eat. They don’t charge enough for their product to be able to afford the sales and marketing required to actually get anybody to buy it. And so they can’t afford to hire the sales rep to go sell the product. They can’t afford to buy the TV commercial, whatever it is. They cannot afford to go acquire the customers.

TF: Too hungry to eat.

MA: Too hungry to eat. And then they sit there and they don’t sell anything and then they get nervous and then they cut their prices.

TF: And then it’s a race to the bottom.

MA: It just makes the problem worse. And so, probably the single number one thing we try to get our companies to do is raise prices. By the way, it’s like, “Is your product any good if people won’t pay more for it?”

from here.  ReformedBroker warms that up with:

Good advice is worth multiples of what a client pays for it. Mediocre advice is not worth a little less, it’s worth nothing because it won’t be adhered to.



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